2018 (12) TMI 339 - AT - Central Excise

Appellant wins appeal on Cenvat Credit Rules violation

The appellant, a manufacturer of excisable goods, faced allegations of contravening Rule 4(4) of Cenvat Credit Rules, 2002 by availing Cenvat Credit on ... Extended period of limitation - irregular availment of CENVAT credit - Suppression of facts - contravention of Rule 4(4) of Cenvat Credit Rules, 2002 - Held that:- On merit the appellant has no case in view of the judgment of the Karnataka High Court in the case of Suprajit Engineering [2010 (3) TMI 414 - KARNATAKA HIGH COURT]. Time limitation - Held that:- The entire demand is beyond limitation because in the present case the demand for recovery of credit availed during financial year ending 31.03.2004 and 31.03.2005 were made in the show-cause notice dated September 2016 is fully barred by limitation because there was no malafide intention as the appellant had a favourable case. The entire demand in the present case is barred by limitation - appeal allowed - decided in favor of appellant. Issues:1. Alleged contravention of Rule 4(4) of Cenvat Credit Rules, 2002 and double benefit under Central Excise Act and Income Tax Act.2. Show-cause notice for demand of Cenvat Credit availed on Capital Goods.3. Confirmation of demand, interest, and penalty by adjudicating authority.4. Appeal before Commissioner and rejection of the same.5. Sustainability of impugned order, limitation, and legal position.Issue 1: Alleged contravention of Rule 4(4) of Cenvat Credit Rules, 2002 and double benefit under Central Excise Act and Income Tax Act:The appellant, a manufacturer of excisable goods, availed Cenvat Credit on Capital Goods while also claiming depreciation under the Income Tax Act. This led to allegations of contravening Rule 4(4) of Cenvat Credit Rules, 2002 and seeking double benefits under both Acts. A show-cause notice was issued, followed by confirmation of demand, interest, and penalty by the adjudicating authority.Issue 2: Show-cause notice for demand of Cenvat Credit availed on Capital Goods:The show-cause notice dated 11.09.2006, with a corrigendum dated 20.07.2016, demanded repayment of Cenvat Credit availed on Capital Goods, along with interest and penalty. The appellant contested the notice, leading to the appeal before the Commissioner, which was subsequently rejected.Issue 3: Confirmation of demand, interest, and penalty by adjudicating authority:The adjudicating authority confirmed the demand of the amount, along with interest under the Central Excise Act, and imposed a penalty as per the relevant section. This decision was challenged through the appeal process.Issue 4: Appeal before Commissioner and rejection of the same:The appellant appealed before the Commissioner against the adjudicating authority's decision, arguing against the sustainability of the impugned order. The Commissioner, however, rejected the appeal, leading to further legal proceedings.Issue 5: Sustainability of impugned order, limitation, and legal position:The appellant contended that the impugned order lacked sustainability in law, emphasizing that the demand was beyond the limitation period and based on a legal position supported by previous Tribunal decisions. The appellant argued against malafide intentions and suppression, citing relevant case laws and challenging the extended period invoked under the Act. The final judgment, considering the submissions of both parties, set aside the impugned order based on the limitation aspect and the legal position supported by previous decisions.This detailed analysis covers the various issues involved in the legal judgment, highlighting the key arguments, legal positions, and outcomes related to the contravention of Cenvat Credit Rules, demand notices, appeal processes, and the sustainability of the impugned order based on limitation and legal interpretations.